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Who let the dogs out?

Man’s best friend, but what of the market’s? Could this prove a ‘dog year’ for investors?

February 16 marks the first day of the Year of the Dog. In Western parlance a ‘dog’ is usually the financial slang for something pretty terrible – think, for instance, of dog deals. In this, our guide to the Year of the Dog, we look at what the year ahead holds and for the section “China and the World”, ask a feng shui master in Hong Kong to give WiC his bespoke predictions for the type of year Donald Trump will have – given the president was born in a Dog year (1946).

What was the last Year of the Dog like?

“I can’t remember when it was this complacent – maybe in 2006,” economist Kenneth Rogoff told Business Insider on the sidelines of the World Economic Forum in January (a prescient remark given the savage market correction this month). Rogoff’s sense of déjà vu also coincides with the return of Jupiter to the same position along its orbit around the sun as in 2006.

The Chinese calendar marks 2006 and 2018 as the years of the Dog – coming after the Rooster and before the Pig according to the 12-schema zodiac order.

Looking back at the last Year of the Dog, things were apparently too good to be true. The US housing market peaked. American unemployment was at a low. The Dow Jones Industrial Average pushed past the 12,000 mark for the first time. Yet, as we all know, all of this was accompanied by massive household debts and government deficits, which led to the ‘great recession’ two years later.

China, in contrast, made some solid breakthroughs in 2006. Five years into joining the World Trade Organisation, the country overtook Japan to become the world’s largest holder of foreign exchange reserves. It also completed its first round of banking reforms with its largest bank – the Industrial and Commercial Bank of China – listed on both Hong Kong and Shanghai stock markets.

With 2017 ending with a bull run, and geopolitical tensions mostly contained – ought we to worry about an economic environment that’s too good to be true again? So what do the feng shui masters say about the coming Year of the Dog?

How will markets fare?

2018 will be a year of “covalence”, governed by the element of “fire,” according to feng shui master Li Kui-ming. He noted that the global economy will be in the doldrums in the first-half, but trending upwards in the latter-half. His oracle foresees that big companies will struggle to perform, but small and medium-sized enterprises will flourish.

Li was particularly worried about the financial services sector because its zodiac sign “metal” is curbed by “fire”.

“Big banks will suffer a major meltdown and turn sluggish,” said Li. Internet companies, on the contrary, will thrive because they harmonise with the element of “fire”. Real estate companies will also get lucky as their governing element “earth” will be invigorated by “fire”.

“There will be an eclectic mix of housing products being launched this year,” said Li, adding that buying small islands will be in vogue.

Li thought equity markets were unlikely to remain euphoric. “The US stocks look as if they can continue to climb, but it is largely dependent on the optimism for President Trump’s tax reforms. The market will see a sharp correction if that policy fails to deliver,” said Li, predicting October to be the worst time for the stock market this year.

Li pointed out that politics will be the driver of all markets in 2018. If relations between the US and North Korea deteriorate, gold as an asset class will make a comeback. The greenback, however, will likely remain subdued, especially against Latin American currencies.

Of all developed market currencies, the Australian dollar sees the strongest potential to rise, while the Japanese yen will stay range-bound, he says. Both the euro and the British pound will be soft. Neither do oil prices look promising.

What about China?

The world’s second largest economy will continue to experience an up-trend in the coming year despite the broader slowdown. The momentum will gather pace between April and October, and spawn a slew of good news, reckons fellow feng shui master Yeung Tin-ming.

He said China’s foreign reserves will further expand in 2018 as more money will be repatriated to the country while the central government will also sell down its Treasury holdings. More stringent measures will also be imposed on speculative outbound investments. “China will get the upper hand in international trade, gaining a bigger interest than before” said Yeung.

He also said China’s leaders are going to be pretty lucky this year and will therefore have little difficulty implementing policies. “The central government will mobilise quite a lot of resources to improve people’s lives and keep its promises,” said Yeung, adding that China’s good fortune will sharply contrast with that of the US. But he noted that the Chinese government will have the tendency to hit its growth targets at the expense of the grass roots, stoking conflicts and imbalance.

Yeung’s oracle also suggested that Chinese leader Xi Jinping will continue to cement his power and may this year take a greater interest in relations with Taipei.

Someone associated with a “dragon” will be particularly helpful to the Chinese ruler, reckons Yeung. One likely candidate might be Liu He, born in 1952, or two days before the advent of the year of the Dragon. Elected into the 25-member Politburo in October during the 19th Party Congress, Liu is widely tipped to become the next vice premier of China and could oversee the country’s economic and financial policies for the coming five years.

Having known President Xi since his teens, the Harvard-trained economist has been a trusted aide and one of the key architects of China’s supply-side reforms.

Last month he was sent to the World Economic Forum at Davos to speak at one of the 10 sessions hosted by the forum’s executive chairman Klaus Schwab. (Other speakers were all state leaders including Donald Trump, Angela Merkel, Theresa May, Emmanuel Macron and Narendra Modi.)

At the Swiss event Liu said China will celebrate 40 years of opening up its markets to the world this year by offering new and even deeper reforms especially in the financial services and manufacturing sectors. (China’s economic reforms began in 1978 when Deng Xiaoping allowed farmers to sell surplus produce and later to farm their own land on long leases rather than as part of a commune.)

French President Emmanuel Macron may also prove a help. His name in Chinese means ‘horse vanquishes dragon’.

Of course, there is good and bad in everything. Despite all the good fortune, China is prone to catastrophes this year such as earthquakes, epidemics and pest-related crop disasters, said master Yeung.

Xinjiang in the northwest will be particularly ill-starred, cautioned another Hong Kong-based feng shui master Lee Shing-chak. “Dreadful – that’s all I can describe for things going to happen in those areas,” said Lee, adding its economic performance will be the lowest among all regions in the country.

Southwestern areas of China, which include Sichuan, Tibet and Guangxi, are vulnerable to frictions too, said Lee, who is also prophesying some massive “explosions” will shock those regions. One remedy is to organise more international conferences to transform the energy of negative conflicts into positive interactions, he believes.

The southern areas such as Guangdong, Hong Kong, Macau, however, will fare well under the Star of Wisdom, whose zodiac sign, “wood,” is conducive to “fire”.

Home to the much-vaunted Greater Bay Area, Lee augured that “its development will top all other regions in the country, earning great reputation at home and abroad”. Notably the Guangzhou-Hong Kong bullet train will open this year too.

Northeastern China – stretching from the Jing-jin-ji metropolis to Liaoning and Jilin – will be blessed by the Star of the Emperor, which is propitious for policymaking. The northern regions such as Gansu, Inner Mongolia, and Ningxia will see immense opportunities. Shandong, Jiangsu, Shanghai, Anhui and other eastern areas will grow more prosperous, but are also susceptible to diseases, predicts Lee.

What are Doggies like?

In Chinese astrology, zodiac signs alone do not dictate one’s personality. The five elements – metal, wood, water, fire, earth – play a role too. They mark the primary states of ever-changing energy, and conceptually underpin a lot of ancient Chinese practices such as medicine, martial arts and feng shui itself.

For those born in a year of the dog (such as 1946, 1958, 1970, 1982, 1994, 2006), their prevailing characteristics include sincerity, being communicative as well as being serious and brave (and selfish too). However, the five elements goes deeper and explains better the varied traits among those born under the same zodiac sign.

Wood Dogs, for instance, are said to be reliable, considerate, patient, and loyal. Of all types, they are the closest to the traits that many people associate with dogs, with Winston Churchill being a prominent instance (1874 was Wood Dog year).

Metal Dogs, who are conservative yet always happy to lend a helping hand. Mother Teresa (1910) and the US First Lady Melania Trump (1970) are two contrasting examples.

Earth Dogs tend to be serious, expressive, and perfectionist – Madonna is one (1958).

Fire Dog is the zodiac sign that’s produced a number of US leaders in recent decades, including Bill Clinton, George W Bush, and Donald Trump – all born in 1946.

Water Dogs are of a courageous yet self-centred disposition, and are represented by a lot of distinguished writers including Jack Kerouac (1922) and Philip Larkin (1922). Britain’s Prince William (1982) also belong to this category.

The year ahead might prove one of trials and tribulations for people born in a year of the Dog because their zodiac sign clashes with the Tai Sui – the heavenly general overseeing the mortal world, or the star that is directly opposite to Jupiter during its 12-year orbital cycle this year.

He warned that Doggies will be under the influence of a number of inauspicious stars this year. “The sword” and “lying corpse,” for examples, augur accidents and injuries. “Imperial canopy” suggests Doggies will always feel lonely and despondent this year, with a tendency to amplify such negative sentiments – as they are at odds with the Tai Sui.

To mitigate their bad luck, Doggies are advised by master Su to donate blood, get their teeth cleaned at the dentist, or get a check up during the lunar months of March and September, meaning April 16 to May 14 and October 9 to November 7 in the Gregorian calendar. Travelling and meeting friends will also be a good way to drive away loneliness or gloomy thoughts.

But will ‘Fire Dog’ Trump find the coming 12 months even more turbulent than his first year in office, when the Rooster zodiac dictated his feng shui? See our next article for more on this topic, and here take a look at what the masters say the Year of the Dog will mean for your own zodiac sign.

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